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tv   Countdown to the Closing Bell  FOX Business  March 18, 2013 3:00pm-4:00pm EDT

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♪ cheryl: countdown to the countdown. the smartphone battle rages on. apple takes direct aim at samsung after the release of its new s4 galaxy. is this its last hope? invest like an activist. one fund manager's take on how to follow the smart money as we break down the fundamentals of 13d activist fund. plus another euro bank crisis. the latest move by cypress spooking markets around the world. bob dahl weighs in on how it's impacting the global. the "countdown to the closing bell" begins right now. ♪ cheryl: i'm cheryl casone in for liz claman. it is the last hour of trading, and the count down's beginning, and the dow is making somewhat
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of a big turn around right now after dropping more than 109 p points. the dow trying to squeeze through the green a little more than 30 minutes ago, now down 26 points as you can see on your screen. u.s. markets have been falling in global selloff in response to cypress' plan for a deposit tax. now it seems like we're shrugging off those headlines. now, shares of hewlett-packard and verizon are helping the dow recover some grounds after upgrades from morgan stanley. verizon actually hitting more than an 11.5-year high today. there's the stock, up 87 cents, 48.89, as you can see on your screen. we're not getting any help from financials today. it's the worst performing sector following suit with some of these european banking counterparts. check out some of these euro financial names that are actually trading here in this country. they're getting knocked down. royal bank of scotland, create suisse, deutsche bank, ubs, war
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clays, all -- barclays, all of these stocks substantially lower in this country. s&p 500, we are still within striking distance of the record high despite moving lower today, the s&p down more than almost five points as you can see on your screen. is it going to happen this week? are we going to get that big number? we're looking for 1565.15. so close. as always. let's get right to our floor show. we've got traders standing by at the new york stock exchange, the cme group and, of course, the nymex. and ben willis is standing by on the floor of the new york stock exchange. i want to talk about the action on the dow, in particular kind of this retrenchment we've seen on the upside. do you think this morning on the cypress news, ben, was a reason to take some profits off the table, or is there something else at work? >> i think what we saw this morning was an overseas reaction to what happened in cypress. interestingly enough, however, what i believe we witnessed was the flight to safety of u.s. equities. we did not come anywhere near
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close to the downturn that we saw throughout the rest of the world that was created by the situation in cypress. that allowed the buy on the dip mentality to take hold somewhere after about 12:30 when europe closed. it gave us an indication there was still some safety in that trade, and we saw the dow actually touch into positive territory for a brief period of time. i still think it's necessary to have a correction, but the fact of the matter kind of an odd way of looking at it, the fact that cypress happened was actually a benefit to u.s. equities today. cheryl: but at the same time, ben, i mean, this was a small event, frankly, in the overall bredth of the u.s. market. what if it was a big event out of europe? what if it was spain or italy that was proposing the same type of strategy with their banks? then what? >> to me, it was a very good indication of the power of the european union and germany. that's the concern to the rest of the world, that germany leveraged their power to say if you want the $10 billion that you were expecting from the
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european union to bail you out, you are going to have to confiscate holdings of private individuals in your banks in order to prove to us that you're worthy of getting our loan. that's a very frightening slope to start the way down. and if they try and enforce the same thing whether it be in spain or whether it be in italy, it's just an indication of the power that the european union can inflict on those people that are seeking their help. the fact of the matter is that the greatest impact is felt on the russians, there's another story that goes along with it that people are not comfortable talking about it. cheryl: we're going to get into it. >> the fact that we started this is a very, very poor indication. cheryl: i'm going to get into that with bob dahl, the russian angle to all of this. let me go to daniel at the cme. ben talking about the fact we had this pullback a little bit. of you're saying that we could be in for, like, a 5 or 7% pullback, but on what, daniel? >> you know, i most certainly think if you look at the move we had just based on this little
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event in cypress, a gdp less than that of vermoot, what's going to happen if a spain gets touched, if an italy gets touched? this market is precarious. i don't think it'll have a long-lasting impact on our economy. we've been dealing with a lousy europe for a long time. but you'll have this pullback at 5 percent which is about 1484 and 7% at 53, i might consider getting back in, but i'm not doing it until then. cheryl: looks like europe doesn't have a plan, obvious. let's go to the nymex, jeffrey grossman. jeff, let's talk about the oil contract. one of things we saw today again was the safety of the u.s. dollar. you had traders around the world jumping into the dollar. your take. >> today was really a dream come true in many respects. we walked in this morning, the dollar was very strong, took our market down right to the support level. 91.75 and spot crude was a major support level on the way down. the minute the dollar weakened, came off those highs a little
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bit, market rallied right pack to where the resistance levels are which is in the high 93.85 to $94 level. it's behaving like a normal market really with a little input that came in from the european information here, but the truth of the matter is this is a market that still, again, is a sale on rallies until further notice and, again, what's even more telling is if you look at the refined products, the gasoline and heating oil, they were very unaffected. they were weak all day today. against the crude oil weak all day. this is still a market that's on its way down. cheryl: i love the fact you say it was a dream come true. spoken like a true bullish oil trader. gentlemen, appreciate it. good to have you on the show, of course, in general. global markets, you know, they did sell off earlier this morning on news that cypress bailout plan. many investors wondering at this point will this latest chapter in the european debt crisis threaten the stock rally on the domestic front, or do you think the markets are going to
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continue to climb to new highs? let's bring in bob dahl, nuveen ec -- equity management. bob, it's great to see you. >> thank you, cheryl. cheryl: even better to have bob dahl exclusively today. talk to me about what you're seeing in cypress. we did get this 109-point selloff on the dow, now we're back up, down only 27 pointings. what do you say? >> well, i think we saw the effects in europe, they weren't so good. even asia got hit rather hard, but the resilience of the u.s -- look, we can't keep having bad news in europe and the u.s. go up, but the u.s. economy remains pretty good. it's a safe haven. the dollar has done better relative to lots of other things. the u.s. is a pretty good place to be including with the cypress event. cheryl: you know, if you look at -- well, okay, first we're looking at gdp. obviously, they've got a massive unemployment problem, 1.1 million people on the small island rocking global markets, but this bailout plan, i think that is where the spook kind of
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came from. a lot of russian money, a lot of wealthy russian investors have their money parked in cypress banks. is that kind of what's got european investors nervous, the running, you know, running towards spain and italian bonds or is something else going on? >> well, i think there's no question that, um, the size of the economy as was reported earlier, that doesn't matter a whole lot. it's all about the connection to europe and the euro. and as you know, anytime somebody says i've got a deposit and somebody says i'm going to take some away from you, boy, that does a whole lot to scare people away, and you wonder will there be contagion effects. the russian phenomenon, no question, there's a lot of money there. isn't this an interesting way to take some of it away? i'm not so sure that's a great plan in the long run. i think that, hopefully, this will pass. of course, we don't have a final answer yet. it's possible that they will lower the clawback for small investors since there's a lot of
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noise in the streets about that. cheryl: i know you've been bullish on the u.s. market, let's bring it back home and talk about the u.s. markets. we've gotten some pretty decent economic news, retail sales that look pretty decent, some of the manufacturing data that we've gotten has been somewhat positive, so overall are you still a u.s. bull? >> yes, cheryl, relative to the rest of the world and absolutely. look, the u.s. economy's doing okay. it's not great, but it's good enough. it's not so good that we're going to have the central banks around the world take their foot off the accelerator, so that's a beautiful thing. growth that's positive, inflation that's low and central banks providing all the liquidity. pretty ideal world for equities to continue to grind higher. cheryl: now, i know that you still like the cyclicals, you've dope this for a long time, industrials, technology. that kind of your 2013 strategy? >> yeah, i would say that one of the surprises at least for me has been how well the defensive names have done in the uptake
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we've seen since the first of the year, and the cyclicals have lagged somewhat. i would be doing some rotating, believing the u.s. and global economy are going to be okay, i think some industrial and technology names make some sense. cheryl: all right. what are you avoiding right now? >> utilities still make me nestles. i think the fundamentals are mixed, and the stocks are fairly expensive. it was the place so many people went chasing yield and pushed the price of those stocks up quite a bit. so there's some telecommunications names that are okay, but most of the plain vanilla electric utilities, i think, are fully valued. cheryl: you've got some specific stock picks, and you like a few names, medtronic, that's interesting, mdt, pfizer, v.a.ler rah, northrup grumman. defense, interesting. but pfizer, health care. >> yeah. i think health care among the defensive group is the the most interesting. health care stocks, we think, have reasonable fundamentals and not expensive valuations.
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utilities being the ore end of that defensive pole. medtronic, three businesses. they're all growing. we think the stock is not expensive. in pfizer we like not only the cost-cutting opportunities, but the mix between what might come out of the pipeline and what's discuss appearing out the back end. slowly improving. cheryl: all right, we're looking at mdt and your other picks as well. bob doll, great to see you, bob. >> thank you. cheryl: bob doll, nuveen asset management, senior portfolio manager. we will see you, hopefully, very soon. you want to stick around for "after the bell" today as they're going to take on how cypress' decision could affect the banks in the united states. erin davis is going to be joining david asman and sandra smith, really interesting interview coming up. the closing bell rings -- it's all about the well right now -- the bell right now, right? we've got 49 minute toss go. the next big thing might come in a small package. mini options hit the new york
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stock exchange today. how can you get in on some possibly big returns? it is by going mini. steve crutchfield takes you to countdown college late other than this hour -- later on this hour. and we are used to charlie, like, constantly on the phone, burning up the phone lines in this building. all right, his phone was ringing off the hook. wait until you hear which industry is dialing charlie's number, and they've got his cell phone, it's even worse. next. ♪ it's monday. a brand new start. your chance to rise and ine. with centurylink as your trusted technology partner, you can do just that. with our visionary cloud infrastructure, global broadband network and custom communications solutions,
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we didn't come out of there saying, "wow, we lost everything!" we came out of there hugging each other, glad that we were okay. ♪ cheryl: our power mover of the hour, jcpenney. promising early customer responses. it's actually pretty cute stuff. jcpenney's sales were down 25% last fiscal year as it eliminated most coupons and discounts. now the department store's in the midst of transforming 700 stores into collections of branded boutiques. sounds like macy's, doesn't it? including joe fresh known for its bright colors.
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there's jcpenney, the stock basically needs a little pit of love. all right, somebody we give lots of love to is nicole petallides, of course, following the latest news on carnival cruise line, and i'm almost afraid to ask what's happening with carnival. >> reporter: right. let's take a look at carnival cruise lines. of course, if you've been following the headlines, they've had three situations, the triumph, the legend and the dream, three ships in two months that have experienced issues, some of which were quite devastating to u.s. passengers. that being said, you can see the stock down 2.5%. it's down about 7% over the last three months as senator chuck schumer is calling on the industry to adopt a bill of rights to guarantee passengers certain protections while aboard these ships. so he's working closely with administrators and the like to move this forward. of course, we've heard different things such as the latest mishap they were giving a $100
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refund and 50% off of your next it's very interesting to see the senator getting in there and really trying to get not only here in the states but also abroad for u.s. passengers this bill of rights. back to you. cheryl: nicole, thank you very much. appreciate it. we'll watch the stock throughout the last 40 minutes of trading. all right, the porn industry is buzzing with last week's fox business exclusive that a wall street hedge fund is financing a controversial company in which some players say pirates porn from other states. so what do they have to say? maybe they're trying to hire charlie gasparino. >> reporter: you know, i was expecting all these jokes that i'm a porn star now and all this stuff. cheryl: financially, yes. [laughter] >> okay, finannially. how do those -- well, we won't get into it. we're not going to get into it. what's interesting about this, it might be the most controversial company in the pornography industry. how did i get involved in this
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story? well, a wall street trader the told me about this, told me about how wall street firms are financing the options. well, they do pay sites, if you've ever heard of -- well, i'm not going to get into the exact site even though i have no problem with porn. the problem with, i think, is they've been cited for pirating porn. they operate something called u-porn and these sort of aggregator sites that allegedly pirate, quote-unquote, legitimate content from other users and dwelt it on their -- get it on their sites illegally. at least that's the charge. we should point out that manwin has called fox business after we did our story denying they do anything illegal. they say, basically, what they use they've gotten it through fair and honest and licensed agreements. i will tell you this, there's another way of looking at in this. i've been doing, talking to various people in the porn industry over the weekend. there's a guy named mike south who's, like, a
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blogger/journalist where he tells me it's not necessarily that they steal it, they steal some of it and they complain about it, and they kind of force the end user to agree to some sort of cheap-o licensing term, so they kind of force the players to deal with them and to, essentially, lend their videos at a cut-rate fee. anyway, that's where we are right now. i will tell you this, that any way you put it, you know, this head of manwin, apparently, he's under house arrest right now for tax evasion. i mean, this is a are controversial company. we do have calls into manwin for further comment on his legal problems, and i will update that baby on either on their twitter page or my twitter page for further comment on this later on today. but what's interesting about this, why do we care? well, wall street is involved in this company. a firm affiliated with goldman sachs, former goldman sachs guys working there, they provided
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manwin with a $168 million loan. we do know that loan was syndicated out, so other wall street firms bought pieces of this -- cheryl: and it's because it was so popular. >> fortress capital, the big hedge fund, was part of that syndication, i understand. cheryl: there you. >> reporter: so why do they do this? they make a lot of money. but i will tell you this, you know, manwin says it does nothing illegal. i was bombarded over the weekend from e-mails and twitter messages about what people believe is their very, you know, some would say illegal, cut-throat business practices. and if they do stuff legally, that's great. if they don't, these wall street firms like fortress should know that they're financing something that's not above board. you know, if you don't like porn, that's one thing. if you like it, that's another thing. this is, quote-unquote, intellectual property. it's licensed material. if you take it and use it and
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put it up on your site without their permission, that's stealing, okay? if you look at, you know, on youtube, you see it all the time. saturday night live clips taken down because it violates term of use. it's different here. and here's the difference between nbc has tons of lawyers guaranteed that look at all these aggregator site, you know? some of these independent porn proprietors don't. how would they know to search every site? so that's where we are right now. it's a pretty controversial story. i'm interested in it because -- no. cheryl: because of fortress. >> reporter: because of fortress. and holbeck. cheryl: and what? >> reporter: kohl beck capital. did you think i said -- cheryl: no, i didn't know. not at all. i'm going to stop interrupting. charlie gasparino, good story. >> reporter: okay. cheryl: i liked it very much. >> reporter: wall street with pornography. san fernando valley. cheryl: whether you agree with it, you know, morally or not,
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the industry itself is an incredible moneymaker, and that is why -- [inaudible conversations] >> reporter: this guy, fabian's, like larry flynt. he's like the king of porn right now. cheryl: yeah. we'll talk about claman when he gets back. >> reporter: she's got to interview fabian now. cheryl: she will, probably. closing bell's going to ring, we've got 37 minute toss go. more than four million options contracts were traded in 2011 and 2012 making it the best two-year performance ever. but can the launch of mini options bring even more max return? steve crutchfield, options ceo, going to be here. he'll talk about it next. ♪ all stations come over to mission a for a final go.
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cheryl: we're getting some breaking news into fox business. mgm, privately-held company, but they have seen a huge profit
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from skyfall, that was the film, the hobbit. now the studio is or considering going public, so an ipo on these guys, that could be worth more than $3 billion. now, they did report net income in 2012, 129 million versus 35 million a year prior, so big profits for the company. now the report they may go public. we will, of course, follow that story for you. well, it is time for a session in counterdown college. mini options 101. it's a more affordable option for investors who own a few shares. a mini contract trading at 1150, for example, would cost $115 versus the standard of $1,150. you know, for the same quote. so today nyse mini options contracts, and five names only. steve crutchfield, euronext, joins me now.
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steve, you know, let's talk about you only picked five names. you're offering these mini options. obviously, you're looking to get more trading volume in. how's the reception been so far today? >> the reception has been great, cheryl, and you're right, we focused on five of the most actively-traded names that are interesting particularly to retail investors who may have some of these names in their portfolio; apple, google, amazon, and the s&p 500 and gold etfs. cheryl: you're trading on both options exchanges. >> reception so far has been great, a very solid start. last time i checked about 30 minutes ago it looked industry wide about 14,000 of these options had traded, more than half about 8,000 on our two markets, so a very nice start to the product, and really great opportunities for those retail investors as you were talking about to be able to make use of options against some of those higher-price stock prices to reduce risk. cheryl: and options have become
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incredibly popular, big jump in the numbers, i'm curious what times of revenue nyse euronext is expecting to see. >> it remains to be seen. of course, we trade on the amex exchange, typically a couple million contracts a day and maybe another couple manager on on -- couple million on the arc exchange as well. we have had a lot of growth in options, as you said, between our two markets in january, just south of 30% market share, and we're looking to grow from there. cheryl: do you find this is coming from u.s.-based retail treaders? are you -- traders? are you getting international interest. chinese retail, for instance, like to come in and try and trade on the new york stock exchange or at least try and trade something like this. are you finding that interest is there? >> that is certainly a growth area for us. we are targeting those u.s.-based retail investors who, to use your example, someone who
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owns 20, 30, $40,000 of a stock like apple, that's well less than 900 -- 100 shares. that investor before was really priced out of the options market because a single 100-share option was bigger than their equity position. now with minis they could trade five, six or seven and really be many a good position, for example, to reduce some of their downside risk in their portfolio. cheryl: that's why i say maybe international, especially the europeans, may be looking at this because we don't have cypress in this company. let's talk about apple and amazon and google. this is kind of a broad swath, if you will, of names, but what types of names do you think you would want to open up the mini contracts to, and have you picked those names yet? >> sure. right now we're focusing on the five names we've added, and, again, focusing on high-dollar, expensive stocks where a single 100-contract option might have been too expensive in the past as you suggested earlier. but certainly if the program is success fl, and we'll give it a
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little bit of time, but there are almost certainly other high-dollar names where it might be appropriate to fold them into the program and, again, try to open up more opportunities for those retail investors. cheryl: okay. i know you're not going to give me a name, steve, but how about a sense of the types of companies? health care? would you be looking at media? what are you open? >> companies really in any sector as well as probably some more of those very liquid etfs because there are other etfs like qqq, like iwm that we haven't yet included. depending on the underlying price of those issues, there's certainly a lot of corrections we could take it if -- directions we could take it. cheryl: all right, steve, something different for our viewers to think about. steve crutchfield, thank you. >> thanks a lot. cheryl: closing bell going to ring, we have got 28 minute toss go. we're seeing some pressure on the dow. dow is down 54, so remember we were down 109 earlier, that was the top of the session.
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now, we'll see. we'll seeful we've got 28 minutes to go. also watching the smartphones battle. it's getting good, actually. the biggest competitors are taking it to the ring for a battle royale. apple takes a strike at samsung's new galaxy phone and blackberry's highly-anticipated z10 phone is going to be hitting shelves this friday. good stuff. who's going to -- [inaudible] smartphone king or queen? that's kind of sexist to always say it's the king, right? we've got the latest coming up after the break. stay with us. ♪
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>> i'm adam shapiro with your fox business brief. acting commerce secretary rebecca blank is taking a new job as chancellor at the university of wisconsin madison. of blank will start her new job in july pending final approval by the school's board. federal employees will rally in washington, d.c. wednesday to protest federal spending cuts known as sequestration. the american federation of government employees organized the event which is just one of about 100 rallies taking place nationwide. amazon publishing is planning to speed up royalty payments to its authors. amazon sent a letter to literary agents saying it will start paying monthly royalties within 60 days of the end of each month every month. authors were typically being paid every three months. we continue our countdown to "co the closing bell" with cheryl casone. ♪ cheryl: shares of broad come are chipping, get it, higher or today after a new report.
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let's head back to nicole at the new york stock exchange. one pun, nicole, just one. >> reporter: right. well, this is a big deal here for broadcom, and we're going to take a look at several of the names in the industry. broadcom is up about a half of 1%. but there are some interesting reports out. so the new samsung galaxy which everybody is all hot on that the s4 uses a broadcom chip rather than an nxt part. this is according to nfc times, they confirmed it in a column. and what's interesting, they're saying that the broadcom chip is being used. there's a look at nxp semi which is down 5%. now, apparently, the site adds broadcom's part at least in part works in tandem with stm, right? stm micro. so we'll watch that one as well. that memory chip, which is used to enable nxp payment apps from
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visa and mastercard. there it is, and that's up 3.5%. so the chips that are supposedly getting used are getting the up arrows. that's the easy way to say it. cheryl: i shouldn't be surprised by the story considering the guy next to me this morning put his smartphone up to the cash register and i'm like, i didn't know they did that. shocking to me. apple is trying to set itself apart in the smartphone wars as the competition continues to bombard the world with iphone alternatives. shibani jokerny is on -- joshi is on that story. it really is getting good -- >> it's getting good, and it's getting ugly, too, if you're apple. the last ten-day period has been quite transformational, quite important in the world of cell phones and smartphones. last week we had samsung, of course, and later on this week we're going to get the blackberry z-10, and competition couldn't be more fierce in this industry. up until now apple didn't really
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have to feel like it needed to defend itself, but things are changing, and in this weekend the company updated its web site to hype some of its feature, and it believes you can't get them anywhere else. here's what the new web site on the iphone/apple web site says. there's iphone and then there's everything else. the company boasting all of its key features, retina display, aluminum case, and it just goes to show you how fierce competition is. gus pap george joe -- say that ten times -- talks about the overall landscape saying it's a competitive market. >> apple, microsoft, the list goesn and on. speaking of blackberry, an analyst goes on to say i don't think bb is putting pressure on apple just yet.
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right now people are looking at challenges between samsung and apple. too early to say, blackberry is putting some pressure. so he believes this is a two-horse race right now. but, again, early indication has shown that blackberry's gotten some early orders, a million orders last week it revealed from one big carrier in europe. it's done pretty well as well. so don't count this one out just yet. cheryl: this reminds me of, remember peter lynch eyesed to go to the mall with his daughter and follow them around, see what they bought? we should all be doing that with teenagers and 22-year-olds now. we should follow them around, see what phones they're using and buy the stocks associated. >> there you go. i have a feeling they're paying for their coffee with their smartphones, and they're holding a lot of the android operating systems. cheryl: the guy had a samsung in his hand, as a matter of fact, this morning. shibani, thank you very much. we've got 18 minutes to go. do you want to invest like an activist does? 13d activist fund follows the
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moves of all the most successful activist investors posting their returns this year. we're going to dive into the fundamentals with fund manager ken flyer. he's coming up next. ♪ it's monday. a brand new start. your chance to rise and shine. with centurylink as your trusted technology partner, you can do just that. with our visionary cloud infrastructure, global broadband network and custom communications solutions, your business is more reliable - secure - agile. and with responsive, dedicated support, we help you shine every day of the week.
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...amelia... neil and buzz: for teaching us that you can't create the future... by clinging to the past. and with that: you're history. instead of looking behind... delta is looking beyond. 80 thousand of us investing billions... in everything from the best experiences below... to the finest comforts above. we're not simply saluting history... we're making it. investor. yeah, ibut i'm a busy guy.or it used to be easier but now there are more choices than ever. i want to know exactly what i ainvesting in. i want to know exactly how much i'm paying. i want to use the same stuff the big guys use. find out why nine out of ten large professional investors choose ishares for their etfs. ishares by blackrock. call 1-800-ishares for a prospectus which includes
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investment objectives, risks, charges and expenses. read and consider it carefully before investing. risk includes possible loss of principal.
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cheryl: here is your fox business market check. you've got exactly one month from today to submit your tax return if you have not done so already. so if you don't get as much back as you want this year, how else can you bring in a little extra green? let's check out some tax-related plays right now. indue wit, maker of turbo tax up
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about 10% so far for the year, h&r block seeing a huge jump, up nearly 50% so far in 2013 because maybe you're thinking i need an actual person and not a software program. don't miss me on the noon show with a fox business special show tax pain, that's all week long this week. americans are going to spend an estimated six trillion hours trying to comply with the tax code. it's a morass. fox business here to help you ease the pain, tax pain all week noon eastern time. for the 13d fund, it's actually high returns. the fund mirrors the moves of act vis investors, and it's up more than 20% over the past year. here with the fundamentals, ken squire, 13d activist fund founder and chief investment strategist. and we should say you're following these big moneymakers, we're going to talk about carl icahn, but you came in december 28, 2011, and you've gained about 30%. >> yeah. we were up over 21% our first
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year and up over 14% this year. cheryl: and this is just following what you think the plays are going to be made. >> well, it's more than just ackerman and icahn. we follow maybe 10-15 different activists and 20-40 positions, and we're analyzing the event, who the activist is, what their track record is, um, what strategy they're employing, what are their chances of success, what sector. basically, analyzing the entire event. cheryl: why is this a good strategy? >> it's a strategy because it's noncorrelated, it outperforms the markets historically, and, you know, the best activists even outperform more. bill ackerman recently said that 55 percent of his portfolio is activist situations, and that 55% generates 90% of his profits. cheryl: so he is, i mean, the numbers are where? >> the numbers have always been there. cheryl: and you're following those numbers as well. chance of success. you're following their strategies, obviously, you're following the names that they're jumping into.
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what in particular type, what move did bill ackerman move, for example, that you think signifies a good purchase for the rest of us? >> we look at his track record in the sector he's investing in, who are the shareholders, what is he trying to do and what we think his chances of success are based on who shareholders are and how likely they're going to support him. cheryl: and what type of companies do you like right now? obviously, her a life has been one of the big headline maker, but what types of companies do you like right now? >> well, we like companies that have stable cash flow, that are good businesses that have an upside catalyst that the activist is bringing to the table. cheryl: like, for instance? >> dine equity is a good example of that. the ihop and applebee's change, they're 99% franchised. it's basically just a royalty stream coming into the company, and the activist is urging them to pay a $6-a-share dividend with a 5% yield which is normal
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for that industry is $120 stock -- cheryl: why would i want to go buy these particular stocks? why would i do this in a fund versus -- >> well, there's lots of reasons doing the funds. i mean, the fund has different styles, different activists and different, different sectors. we're diversified in that way. secondly, activism is often a j curve, so it goes down sometimes before it goes up depending on the type of activism. the fund has different activism, different activist situations at different parts of the life cycle so that j curve doesn't happen as much. cheryl: if you're going to do this, you've got to be ready for volatility. >> well, outside a fund -- outside of a fund there's certainly volatility, and you're not going to be right 100% of the time, so you should do any type of investing in a portfolio. cheryl: okay. let's talk about the investors you follow. i teased a couple of names, obviously, carl icahn, bill acdman, but not as well known, mar caddo, corps vex -- >> keith meister who was carl
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icahn's right-hand man, started his own fund. mick mcguire who was bill ackman's right-hand man. so there are a lot of new guys coming out that aren't as well known. cheryl: we were talking about bill and carl icahn and the herbalife story, and they're pitted squarely against each other. i'm assuming that's something you're going to stay away from. >> yeah, we're going to stay away from that. that really hasn't happened in the seven years that i've been following activist situation, and i'm not sure it's going the happen like this in the next seven years. we respect carl and bill very much, and we would never take a side against either one of those. cheryl: i know you know carl icahn, what makes him tick, do you think? >> he's just investing. he loves what he duds, he love -- does, he loves making money. making money and investing, i think, is really what he's all about. cheryl: making money but also, i mean, he creates a lot of controversy. >> well -- cheryl: there's got to be a piece of him that all -- >> all activists create
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controversy, and, you know, most activists at least, and that's the nature of the beast. cheryl: do you think there's a particular sector, it could be -- i'm thinking of yahoo! right now payoff carl icahn, but do you think there's a particular sector that's ripe for picking when it comes to activismsome. >> technology's always been the top sector, and for the last five years or so it's been the number one targeted sector by activists and particularly because a lot of these technology company, they have successful core businesses, and then they spend a lot of money on research and development and sg and a to start other businesses, and activists come in and try to get them to use the cash in a more efficient manner. cheryl: it's interesting, but you're spreading it out, diversifying with the fun. ken squire, thank you. >> thanks for having me. cheryl: of course, co-founder there. closing bell's going to ring, we've got seven minutes to go. you know, actually, we're upgrading our selloff a little bit. dow is down 65 right now. there's some trade bluffs, you've got seven minutes.
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last chance to make money coming up after the break. ♪
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luckily, he found someone who gave him a fresh perspective on hisortfolio. and with some planning and effort, hopefully bob can retire at a more propriate age. it's not rocket science. it's just common sense. from td ameritrade. >> want to tell you the vix intraday. take a look. we're up more than 20%. this is the volatility index. i mean, risk, it is out there. the news on the cyprus scaring markets around the world today. i want to put this into perspective. the vix is down about 25% so far in 2013. so what you're seeing, year-to-date, the vix had been, actually incredibly low. meaning that investors felt safe about putting money into the markets and